Diversifying without cannibalising the market

Forty years ago, Dr Neil Peach’s father embarked on a campaign to redevelop Enoggera Bowls Club and was bitterly disappointed his efforts came to nought. So it is no small irony that Peach, a member of the club for the past four years, has been instrumental in achieving his father’s ambition, albeit unexpectedly.

With a strong business management background, Peach was asked by the club if he would be interested in working with other club members - Greg Flynn and Jeff Smith - and stakeholders to help develop a master plan for the club to establish a sustainable business model for the future. 

The club had already successfully gained a Development Approval thanks to the efforts of Dan Williams, the son of a member who works as a successful property developer.

There was a largely uniform acceptance within the club sector that sustainability requires change as the membership base of many established clubs continues to trickles off. This is in part due to older members passing, younger generations increasingly filling their leisure time with online pursuits and competition where there used to be none competition.

Earlier this year, Clubs Queensland commissioned a report from KPMG on the future of the clubs sector and the findings of that were emphatic - if clubs do not diversify they are unlikely to be sustainable.

“The challenge for clubs is that without innovation…they are at significant risk of being unable to maintain the same level of community contribution, attract members and maintain and evolve their physical assets,” the report states.
“To do this, industry participants need to develop a market-based approach to income diversification strategies and assess and allocate assets into strategic pathways.”

For Enoggera Bowls Club, the path to diversification was a humbling one with Peach explaining the club looked at its options and: “in essence, realised that the only viable option for us to understand what our members and community needed was for us to make ourselves completely vulnerable by opening up the club to others”.

“I suppose you could say we have almost diversified to the point of disappearing, but it has created the opportunity for the club to become more sustainable,” Peach explained. “By opening up, it can at first feel as if you are giving things away but it absolutely increases the chances of sustainability well into the future."

As a result, in late July, the finishing touches were put to an ambitious $16 million redevelopment of the inner-city Brisbane club. 

This included building four showrooms along the front of the site which are now leased or sold - two are activity based tenants and the other two are retail spaces which account for a combined 3,500m²  of the 15,000 m² site.

Williams, who had managed the DA process for the club, also helped to secure the tenants for these as part of his ongoing invaluable advice and support to the club.

The funds from this were used to redevelop the back half of the site into a new sports centre which is quickly becoming a community hub and two undercover, world-class bowling greens.

It is worth noting the club holds 17 gaming machine entitlements which it has been trying unsuccessfully to sell since last year, having made the decision to be a non-gaming site.

“We had thought we would be adopting the gaming model when we first started on this journey but the advice we received was that it is not going to be sustainable into the future with people increasingly using digital devices to meet their gaming needs,” Peach explained.

“When we approached the bank, they said if we were to introduce more gaming, we would need to pay back half of the loan within five years and that was something we were not comfortable with. 

“We also found that to be successful in gaming, you have to go for it in a big way so you need to have 40 or 50 machines. The hard realities for us as a club were that there is no expansion in on-site gaming so the decision was made not to pursue that path. 

“As a result we have become a very family-friendly club and that appears to be a sustainable model because we now have every demographic in the area coming into the premises for a broad range of actives. Everyone is catered for."

Peach explained that a year ago, two of the club’s four existing greens were being used for bowls with the remaining two being used for futsal and volleyball.

“The assets we had were not being used to full effect,” he continued. “We took out two of the greens which were not being used and built a new space which could accommodate those activities and a lot more.

“We now have a Cafe 63 on the site which has proven extremely popular and on the first floor of the sports centre we have My First Gym which is very popular with families. Families can now come to the club, the kids can go to My First Gym and the older ones can go to Healthy Connections Plus next door which is a fully equipped pilates gym.

“Or they can go bouldering at the 9 Degree Boulder Gym out the front or visit X Golf also on the site which features simulations of 65 golf courses from around the world.

“We also have a movie screen in the bowls pavilion which we are using as a scoreboard and we hope to run family movies and feature special sporting events.”

Club memberships at the club have increased from 100 in 2018 to a current base of 160.

David Wing and Greg Wilson, Directors of Club Property Solutions, work with clients in the club sector through redevelopment projects which enhance their sustainability and they say this means ensuring they “remain relevant”.

“A cohesive and strategic approach to re-development of clubs is more important than ever now the club sector is so challenged in a number of areas,” Wing said. “As such, the best utilisation of the club’s property can be critical to its survival and prosperity and that includes potential new uses that recognise societal change.

“Clubs were initially established to be physical locations communities could gather at but the world around clubs has changed and not all clubs have kept up or even understood how far behind they are  falling.”

Wilson explained that clubs looking to redevelop should start by trying to understand what opportunities are now available and being open to a world of possibilities which previously did not exist.

“Often when clubs are redeveloping, they are doing so to remain sustainable and appeal to a broader membership base, so developing a master plan is often the best approach, looking at what is best for that campus and other potential uses which are synergistic with the club.

“Are the uses they are considering relevant to the club’s membership and the local community and the best use of the space available to them?”

Wilson added the example of a bowls club utilising some of its land to build supported living accommodation for seniors.

“In some instances this may be a synergistic use of the land which directly responds to the needs of club members and the demographic in the area the club is built in.

“There are a lot of lazy assets sitting around and many clubs are starting to realise the potential this offers them in terms of revenue streams and service offerings.”

Wing said often the biggest impediment to a club realising its full potential and that of its assets and land “is the willingness of the club Board”.

“Many of the clubs which are struggling to survive now were built out of an immediate need within the community and there was no thought to competition,” Wing continued.

“Now clubs are competing with hotels, pubs, other food and beverage offerings, online food deliveries, online gaming. If they are going to be sustainable in this market, they need to get more competitive.

“And the best way to do this is, without a doubt, through the development of a long-term master plan. You have to find new drivers and uses to help the club maximise its attractiveness as a destination.”

Wing and Wilson suggested land uses could be as varied as offering short-stay accommodation, providing travel offerings - which are particularly popular with older club members who have more leisure time - or creating a new food and beverage precinct for the community.

Wilson said a clever master plan will include provisions to build partnerships with accommodation, retail and service operators, providing space which can be sold or leased to generate revenue.

“Throughout this process, it is essential clubs make sure they are clearly communicating the social benefits of what they do and what they provide for the community,” Wing added. “For many people, if they have a choice of where to spend their money, they like to know they are supporting community infrastructure and are more likely to support the club because of it.

“It’s a nice virtuous circle with high social impact.”

The pair said it was also important clubs plan for future growth by ensuring any construction now is done in a way which makes it as suitable as possible for  re-purposing as the use and demand for space will continue to change into the future.

“Clubs have to start navigating generational change,” Wing said. “The pace of change is accelerating and clubs should be planning for it.

“Another factor we need to be aware of is that there is presently no growth, per se, in the Brisbane metropolitan hospitality market so there is cannibalism everywhere with pubs, clubs, restaurants, cafes and bars competing against one another for the same dollar.

“This is a game where the most appealing offer wins. So, it is imperative for clubs to make themselves places that people want to go to as a preference. 

“At its core this is about the hospitality offer but that offer is strengthened further where the club campus offers other services and facilities that strengthen its position within the community.

“Clubs can build resilience through more varied uses of their sites bringing in more people which potentially unlocks capital from the site and builds the resilience clubs need and want.”

Reflecting on the journey undertaken by Enoggera Bowls Club, Peach said it was difficult - equating it to being harder than undertaking a PhD - but absolutely worth the effort.

“It was a journey that forced us to look at our reason for being and what we are offering and giving back to the community,” he said.

“It certainly doesn’t feel like a dying club; it’s a place which offers something for everyone in the family from the youngest to the eldest and that is what a community club should be.”